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Why Legal Zoom Should Stay Out of The Accounting Business

selected for audit

 

There is a serious problem in the accounting industry that can be traced back to Intuits' QuickBooks program. The program touted its ability to save small business owners money on their bookkeeping by doing it themselves. It didn't really work out the way people expected.

"Bookkeeping" was being done by amateurs and it turned small businesses and the accounting on its head. Accountants were considered trusted advisors before Quickbooks and software troubleshooters after QuickBooks.

Accountant's businesses suffered and most acquiesced to their clients' ridiculous demand that they do their own books. Accounting systems and controls went out the door and accountants and tax preparers started taking shortcuts. Accepting their clients' unreconciled books and coming up with some very creative ways to document how they prepared tax returns.

The accounting professional allowed the incomprehensible consequences of this approach to providing "accounting" services. Small business owners were & are being deprived of the valuable advisory services accountants provided when accountants did real accounting. Business owners wasted valuable time in an area they had no skills or experience in. Receptionist friends and family members became "the bookkeeper. Clients expected accountants to work with the garbage they produced.

This obvious procedural flaw has contributed substantially to tens of millions of small business failures. It was a breakdown in the accuracy and reliability of vital data. Small business owners looked at their financial reports and scratched their heads in bewilderment. How does anyone run a successful business without being on top of their numbers? The Intuit claims that "You can save money by doing your own bookkeeping" was a lie of monumental proportions!

Accountants countered with sending bookkeeping work offshore, taking advantage of technology and low-cost labor primarily in India. By lowering their cost they could combat the do-it-yourselfers.

That business model also posses some serious risks, quality control, and compliance issues. For 1, bookkeeping data, including bank, credit card, and other sensitive data has to be either transmitted or made available to people in countries that are outside of the US jurisdiction. 2nd is the reliability of the data. Individuals in outside countries are not always versed in US laws and regulations. There are undeniable communication issues. I know this from my own personal experience. There are tasks that are appropriate to be outsourced but bookkeeping is not one of them.

THE DILUTION IN THE QUALITY OF SERVICE ACCOUNTANTS HAVE PROVIDED SMALL BUSINESS CLIENTS HAS CONTRIBUTED TO THE EPIDEMIC OF SMALL BUSINESS FAILURES. UNLICENSED AND UNTRAINED INDIVIDUALS BECAME "BOOKKEEPERS" AND MILLIONS OF ACCOUNTANTS BECAME INCOMPETENT PAPER PUSHERS

Enter Legal Zoom. They have somehow entered the accounting referral business through a firm which is admittedly,

"Not licensed to practice public accountancy in any state, nor are either registered with any State Board of Accountancy.

1-800 Accountants is free to market themselves any way they please. The issue I have is this-Legal Zoom is a giant in the industry. Millions of small business owners are attracted to their site to register their business. Most are uninformed, new business owners eager to save time and money. Legal Zoom has become a household name and a trusted source to help entrepreneurs get their business off the ground, inexpensively.

This is a valuable service and the next step for every business owner that wants to be successful is to connect with a good, quality accountant. The price looks almost too good to be true, and it is because they have reduced the trusted advisor down to a commodity-based on cheap prices.

I blame accountants and lack of strong leadership for allowing this to happen. It has to end. Why isn't Legal Zoom teaming with The States Board of Accountancies, Enrolled agent and tax preparer societies, bookkeeping organizations, etc? In other words - individuals licensed to do bookkeeping and accounting in The United States of America.

Joe

Joe DiChiara CPA offers Small Business Advisory Services to passionate entrepreneurs that want to Start, Build and Manage a small business successfully. He enjoys being an “Out of The Box Thinker” and has helped thousands of small business owners start, build and manage their own business. In 2009 Joe discovered a new approach to business through “The Science of Getting Rich” written by Wallace Wattles and the inspiration behind the movie "The Secret".

After successfully applying the SOGR principles as well as Napoleon Hill's "Think And Grow Rich" to his own business, Joe discovered that there is a large market segment that is being overtaxed, unprotected and unfairly targeted by IRS. Every year over 3,000,000 entrepreneurs start businesses unaware of the dangers of operating as a sole proprietor with over 25,000,000 in the process of going bankrupt.  This discovery inspired Joe to develop programs, tools, and resources to help stem the tide of these avoidable small business failures.

Currently, Joe is building an online school for small business owners www.bedrockbusinessbuildersuniversity.com and www.taxauditsmackdown.com which will help entrepreneurs create the books and records needed to survive any tax audit. 

Joe is a #1 Amazon Best-Selling Author and you can Check Out Joe’s Books on Amazon by clicking here!